He Equipment Services, Inc. (HEES) SEC Filing 10-Q Quarterly report for the period ending Tuesday, June 30, 2020

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Revenues decreased 16.6% to $278.3 million versus $333.6 million a year ago.

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Net income was $8.8 million in the second quarter compared to net income of $22.6 million a year ago.  The effective income tax rate was 26.9% in the second quarter of 2020 and 26.8% in the second quarter of 2019.  

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Adjusted EBITDA decreased 19.3% to $95.3 million in the second quarter compared to $118.0 million a year ago, yielding a margin of 34.2% of revenues compared to 35.4% a year ago.  

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Total equipment rental revenues for the second quarter of 2020 were $155.8 million, a decrease of $36.5 million, or 19.0%, compared to $192.3 million a year ago. Rental revenues for the second quarter of 2020 were $140.8 million, a decrease of approximately $33.1 million, or 19.0%, compared to $173.8 million in the second quarter of 2019.

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New equipment sales decreased 18.0% to $43.9 million in the second quarter compared to $53.6 million a year ago.

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Used equipment sales decreased 5.9% to $34.0 million in the second quarter compared to $36.1 million a year ago.

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Gross margin was 33.1% compared to 37.4% a year ago.  The decrease in gross margin was largely the result of lower rental gross margins.  

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Total equipment rental gross margins were 38.0% in the second quarter of 2020 compared to 44.7% a year ago.  Rental gross margins were 41.5% in the second quarter of 2020 compared to 49.1% last year.  The decrease was primarily due to lower time utilization and rates.  

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Average time utilization (based on original equipment cost) was 59.5% compared to 71.2% a year ago.  The size of the Company’s rental fleet based on original acquisition cost decreased 2.3% from a year ago, to $1.9 billion.

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Average rental rates decreased 2.8% compared to a year ago and declined 2.8% sequentially based on ARA guidelines.  Beginning with the second quarter of 2020, rate changes will be reported in accordance with ARA guidelines.